Effective October 1, 2011, a new law in Connecticut – Senate Bill No. 361 (S.B. 361) – signed by Governor Dannel Malloy will prohibit certain employers from using credit reports in making hiring and employment decisions regarding existing employees or job applicants. The law applies to all employers in Connecticut with at least one employee. Connecticut is one of six U.S. states – joining Hawaii, Illinois, Maryland, Oregon, and Washington – that currently prohibit the use of credit history in employment decisions.

S.B. 361 bans almost all employers from requiring job applicants or current employees to consent to a request for a credit report as a condition of employment.  Exceptions to the statute are: employers that are financial institutions as defined under law; credit reports required to be obtained by employers by law; and credit reports “substantially related to the employee’s current or potential job.” These “substantially related” reports are allowable if the position:

  • Is a managerial position that involves setting the direction or control of a business, division, unit or an agency of a business;
  • Involves access to personal or financial information of customers, employees or the employer, other than information customarily provided in a retail transaction;
  • Involves a fiduciary responsibility to the employer, as defined under the law;
  • Provides an expense account or corporate debit or credit card;
  • Provides access to certain confidential or proprietary business information, as defined under the law; or
  • Involves access to the employer’s nonfinancial assets valued at $2,005 or more, including, but not limited to, museum and library collections and to prescription drugs and other pharmaceuticals.

A 2010 survey from the Society for Human Resources Management (SHRM) – ‘Background Checking: Conducting Credit Background Checks’ – revealed 60 percent of employers conducted credit checks on some job applicants:

  • 13 percent of employers surveyed conducted credit checks on all job candidates.
  • 40 percent of employers surveyed did not conduct any credit checks on job candidates.
  • 47 percent of employers surveyed considered credit history for candidates of selected jobs.

“Employers should not use credit report checks unless there is a clear business justification related to the job in question since some credit reports contain errors,” says Attorney Les Rosen, CEO of Employment Screening Resources (ESR), a background check company accredited by the National Association of Professional Background Screeners (NAPBS). “Employers should use extreme caution with credit reports and be aware of both federal and states laws.”

To help job applicants better understand credit checks, ESR offers a complimentary white paper, ‘The Use of Credit Reports in Employment Background Screening: An Overview for Job Applicants,’ available for download at http://www.esrcheck.com/Download/. For more information on background checks, visit ESR at http://www.ESRcheck.com.

About Employment Screening Resources (ESR): Founded in 1997 in the San Francisco area with a mission to help employers and employees maintain safe workplaces, Employment Screening Resources (ESR) is accredited by The National Association of Professional Background Screeners (NAPBS®) and provides industry leading technology, legal compliance, service, turnaround, and accuracy. ESR also wrote the book on background checks with ‘The Safe Hiring Manual’ by founder and President Lester Rosen. For more information, visit http://www.ESRcheck.com.